Dive Brief:
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The implementation of the Federal Energy Regulatory Commission’s Order 2023, which mandated a series of interconnection process reforms by most transmission operators, has exposed the need for additional changes to the interconnection process, panelists said Wednesday during a webinar hosted by S&P Global Market Intelligence.
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Panelists expressed concern that neither Order 2023, nor the more recent Order 1920 on transmission planning, have addressed the need for a process to retire and replace aging fossil-based generation. The penalties created for non-compliant transmission operators may also slow interconnection processes, panelists said.
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American Electric Power has filed a petition with FERC asking for an extended deadline to comply with Order 2023, and calling on regulators to address the oversights the implementation process has revealed. However, so far FERC has only responded to their request for a longer deadline, said Stacey Burbure, AEP's vice president of FERC and RTO strategy and policy.
Dive Insight:
The interconnection backlog has grown to 2,200 GW, with the addition of 111 GW of hybrid solar-plus-storage projects in the past year alone, according to analysis by S&P Global Commodity Insights.
The implementation of Order 2023 has brought reason to hope that projects will move through interconnection queues more quickly in the months to come, Wednesday's panelists said. But it has also revealed gaps not addressed in FERC's recent “year of transmission” rulings — especially the need for reforms addressing the retirement and replacement of older generating plants, Burbure said
Burbure said AEP would also like FERC revisit its decision to eliminate the Reasonable Efforts Standard and impose a new system of penalties for transmission operators who don't complete interconnection studies in a timely manner. And she said they asked FERC for an extended deadline for compliance with the order, which was originally due in April.
“The elimination of the Reasonable Effort Standard and the imposition of penalties is very fraught,” said Burbure, who raised questions about whether the new system would lead to ligitation that could further delay interconnection processes.
Donnie Bielak, director of interconnection planning at the PJM Interconnection, said the grid operator shared Burbure's concerns. After several years of stable and even declining electrical demand, he said, PJM has experienced a “very sharp uptick” he attributed to an economic boom in the region, the return of heavy industry, increased computing needs and electrification.
“In order to meet those demands, we have to increase supply, so we are going through interconnection reform right now and interconnecting as much as we possibly can to meet those demands,” Bielak said. “At the same time, we are seeing generator retirements. So not only do we need to keep pace with demand trends, but also generator retirement trends.”
Barring a change in the current course, Bielak said it was possible that growing demand would lead to delayed retirements for some aging generating facilities.
Manuel Esquivel, Enel North America's manager of regulatory affairs for the PJM region, said he believed that regulators should focus on bringing new generation online with greater speed to prevent growing demand from delaying fossil generation retirements and, ultimately, the energy transition itself.
“There are a lot of renewables and storage in the queue that can provide a lot of services to the grid,” he said. “Accelerating all of that is going to be extremely important to continue that transition and learn from that process as well.”
